Through the alliance, the two exchanges will work together to establish a platform for the listing and trading of ETFs, and will jointly undertake marketing and investor education efforts. Ultimately the exchanges hope to achieve seamless cross listing and cross access of each other's products.
TSE President and Chief Executive Officer Masaaki Tsuchida commented, "This collaboration with the Amex, the global leader and pioneer in ETFs, is an wonderful opportunity for TSE's ETFs market that will be established soon. In today's era of diversification and globalization of financial markets, our partnership will fulfill the needs of international investors and market participants, particularly in both our markets. We look forward to seeing that our ETFs market will go from strength to strength in both countries as well as on a global basis."
"With the addition of TSE - one of the world's premier exchanges - to our global ETF network, we have cemented our clear leadership in the product segment, and added an important component to our plans for a global trading platform for ETFs," said Salvatore F. Sodano, Amex Chairman and CEO. "As the globalization of financial markets continues, there is no question in my mind that innovative, progressive products - like ETFs - will continue to grow in both significance and popularity."
ETFs are indexed funds that trade throughout the day in the same way as individual stocks. Designed to closely track the performance of an index or basket of stocks, they can be liquid and cost-effective investment vehicles. Retail or institutional investors buy a single share of a specific ETF and benefit from the results of the index, whole business sector, national economy or region on which the fund is based.
The TSE is the premier exchange of Japanese cash equities and derivative products both in Japan and from a global perspective. The trading volume of TSE in 2000 boasted 174.1 billion shares, an increase of 12% from 1999, which positioned the TSE as the central market of Japan, occupying 88.8% of the total volume of stock trading in Japan. The TSE also recorded a daily average trading value of ¥1,002 billion in 2000, an increase of 30% from the previous year, and a market capitalization of ¥360.5 trillion at the end of 2000. Having approved necessary amendments to its rules and regulations, the TSE will list and trade ETFs soon. The TSE was also the first exchange in Japan to offer a marketplace for such securities futures. The TSE currently offers trading and clearing of Japanese government bond (JGB) futures and options, Japanese stock index futures and options, and individual equity options. JGB futures trading began in 1985, followed by the launch in 1988 of futures on TOPIX (Tokyo Stock Price Index), that is the most popular benchmark in Japan. Equity options started to trade in 1997. Recently, the TSE also listed futures and options based on S&P/TOPIX 150, a float-adjusted and market capitalization weighted index that was developed by a collaboration between Standard & Poor's, a division of McGraw-Hill, Companies, Inc., and the TSE.
The American Stock Exchange pioneered the concept of ETFs in 1993 with the introduction of trading in SPDRs(R) -- Standard & Poor's Depositary Receipts(R), an exchange-traded unit investment trust based on the Standard & Poor's 500 Index(R). There are now 100 ETF products trading on the American Stock Exchange, with assets currently totaling nearly $80 billion. In the fourth quarter of 2000, net new asset investment in ETFs exceeded inflows into equity mutual funds, according to a report published by Strategic Insight, a New York-based research firm.
The AMEX(R), a subsidiary of the National Association of Securities Dealers, Inc. (NASD(R)), is the only primary exchange that offers trading across a full range of equities, Exchange Traded Funds (ETFs), including structured products and HOLDRSsm, and options. In addition to its role as a national equities market, the Amex is the leader in ETF listings, listing 100 ETFs to date, and is the second-largest options exchange in the U.S., trading options on broad-based and sector indexes as well as domestic and foreign stocks.
